Category Archives: New

Englund and Svensson reject Riksbank’s proposal for target variable and variation band

Consultation response to the Riksbank’s memorandum “Change of target variable and introduction of variation band”

Peter Englund and Lars E.O. Svensson, Stockholm School of Economics    pdf   Swedish   Ekonomistas

The Riksbank’s proposal for a change of target variable and the introduction of a variation band is rejected. There is no urgent need for these changes now, and it is inappropriate to forestall the parliamentary committee that currently reviews the monetary policy framework, including the issue of the choice of target variables and a possible variation band. The proposal for introduction of a variation band is specifically rejected. It does not serve any purpose and can, in practice, create a significant ambiguity about the inflation target, result in less effective anchoring of inflation expectations, and make it more difficult both to evaluate the Riksbank’s target achievement and to hold the Riksbank accountable for fulfilling the monetary policy goals.  Continue reading

Remissvar på Riksbankens PM om “Byte av målvariabel och introduktion av variationsband”

Peter Englund och Lars E.O. Svensson, Handelshögskolan i Stockholm    pdf   English   Ekonomistas

Riksbankens förslag om byte av målvariabel och introduktion av ett variationsband avstyrks. Det finns inte något akut behov av dessa förändringar nu och det är olämpligt att föregripa den parlamentariska kommitté som gör en översyn av det penningpolitiska ramverket som bl.a. innefattar valet av målvariabel och eventuellt variationsband. Förslaget om introduktion av ett variationsband avstyrks speciellt. Det fyller inte någon funktion och kan i praktiken skapa en betydande oklarhet om penningpolitikens mål, ge ett sämre ankare för inflationsförväntningarna samt försvåra såväl en utvärdering av måluppfyllelsen som ett ansvarsutkrävande av Riksbanken.  Continue reading

Vox column: Re-evaluating the result that the costs of ‘leaning against the wind’ exceed the benefits

Vox column: Re-evaluating the result that the costs of “leaning against the wind” exceed the benefits, January 24, 2017.

The IMF and the Federal Open Market Committee have both suggested that the costs of ‘leaning against the wind’ exceed the benefits. This Vox column responds to claims that the results of my research backing up this conclusion could be overturned. It argues that the alternative assumptions necessary to overturn the result are unrealistic, and that the finding that the costs of the policy exceed the benefits therefore seems to be robust.

The column summarizes “How Robust Is the Result That the Cost of “Leaning Against the Wind” Exceeds the Benefit? Response to Adrian and Liang.”

FOMC minutes: Costs of leaning against the wind typically outweigh benefits

FOMC April 26-27 minutes on the relationship between monetary policy and financial stability (pp. 2-3):

Most participants judged that the benefits of using monetary policy to address threats to financial stability would typically be outweighed by the costs associated with deviations from the Committee’s employment and price-stability objectives induced by such actions; some also noted that the benefits are highly uncertain.